What we are concerned about in this regard is the JUSTIFICATION for the decisions reached by our various courts of law, and the principles of law applied by lawyers in relation to commercial and business practices. Laws are created by lawyers, commercial and business law is created by commercial lawyers, but it is business men and women who must abide by, apply and work within it.
There are a number of sources of English law, and this is markedly different from some other jurisdictions, eg China and parts of continental Europe. In the UK, the legal system is a COMMON LAW LEGAL SYSTEM, as opposed to a CIVIL LAW SYSTEM.
It is perhaps easier to define a civil law system first, in that a civil law system is a written and accessible set of laws that cover all aspects of activity through codified legal principles and rules. These codified rules are usually created through the political apparatus, the court system is usually inquisitorial, not bound by precedent, and the law is administered by a specially trained judiciary with a limited authority. The judicial role is to INTERPRET the law.
Roman law was one of the first major civil law systems, and the Germanic codes that had developed from the 6th and 7th centuries in Germany were adopted by developing Asian nations from the 19th century onwards. The German Civil Code became the basis for the legal systems of countries such as Japan and South Korea, and in China, the German Civil Code was introduced in the later years of the Qing Dynasty and formed the basis of the law of the Republic of China. So in China, in simplistic terms, the law is created by the Legislative Branch of government, the National Peoples Congress and is applied and interpreted by the Judicial Branch of government, the Supreme Peoples Court being at the top of this hierarchy, and Basic Peoples Court at the bottom.
In the Common Law legal system of the UK there are a number of primary sources:
(i) Common Law
(iii) European Legislation
Sometimes also referred to as CASE LAW, this is judge-made law, a body of legal principles that are made by our judges on a case by case basis. This practice has developed over the centuries in England from the time of the Norman Conquest (1066). Local customary law was gradually brought together as the government and administration of the various parts of England and Wales was centralised in London in one parliament and one supreme court. Knights originally, then judges would travel around the country from London, hearing cases and recording their decisions so establishing a set of PRECEDENTS and a unified system of law. This became known as the COMMON LAW a law that was common to all, applied to all men in all parts of the country.
An area of law that still to this day remains based in principles of common law is the law of contract, and this will be one area of law we will be considering in our studies this semester. While there is some statute law in the law of contract, most of the fundamental principles of how we create interpret and administer contracts at law in England, are to be found in common law, judge-made case law.
For example, it is a rule in the law of contract that, in general, only the parties to a contract can sue for breach of contract. A third party, C, cannot sue for a breach of a contract made between A and B. This is known as the COMMON LAW DOCTRINE OF PRIVITY, and as discussed in the case of Tweddle v Atkinson (1861). In this case, the father of the bride and the bridegroom entered into an agreement to pay the groom certain sums when he had married the daughter. On the marriage, one father refused to pay the groom and the court decided that the groom could not sue for breach of contract because he was not a party to the contract even though he was obviously mentioned in it and had benefits under it.
(ii)Statute Law or Legislation
As judges are making laws in the court room, so our Parliament makes law by way of statute, or Act of Parliament. More and more our law is developed in this codified form, particularly in areas where the principles are complicated and complex eg company law, social security law and tax law. As these fields developed rapidly, it was not feasible to wait for a particular point to be raised by parties to an action in a courtroom, and for clarity and certainty, particularly in the commercial field, rules needed to be established and applied to keep pace with developments.
So, for example, as business resorted more and more to conducting commercial ventures through the corporation, it became clear that we needed regulation in codified form to govern the incorporation and ongoing operations of that entity. Hence, most of our company law is contained in statutory form, under the Companies Act 2006. It is the biggest piece of legislation ever passed by a UK parliament and has over 1300 sections. It took 10 years to draft and introduce, and only fully came into force in 2009. Cases on the points of law in the Act are only just now starting to take place in the companies courts. So, in semester 2, in the module Commercial Law, we will be concentrating our focus on statute law, unlike this semesters focus on the common law, as it contains the fundamentals of the law relating to contracts in England.
Finally, it should be noted here that if there is a conflict between the common law and statute law, STATUTE WILL PREVAIL.
(iii) European law
On Britains entry into the European Community in 1972, our parliament enacted a piece of legislation called the European Communities Act 1972, under which Britain made an undertaking to be bound by COMMUNITY LAW, that is, laws made by the European Parliament. Section 3 of the ECA 1972 binds our courts to accept the supremacy of community law.
It is not however strictly correct to say that EU law automatically applies in the UK and that domestic UK law is therefore redundant. Rather, if there is conflict between the two, in a given area, then EU law is paramount in this instance. Where there is a gap in the UK law, and there is EU law on that point, then again, EU law will apply, to create a certain right or an obligation.
A very significant case on the issue of EU supremacy was Factorame Ltd v Secretary of State for Transport (No 2) . In this case, the EU had made laws to govern the accessibility of all member states of the EU to fish each others waters, setting limits and restrictions on this, but nevertheless granting equal rights to all members to fish each others waters. To fish in UK waters and in this manner, a ship had to be registered under the merchant shipping regulations of the state in whose waters it intends to fish.
In response to this, the UK passed an Act of Parliament which required that registration would only be granted if there was a genuine and substantial connection with the UK. As a result of this, a Spanish vessel, the Factorame, could not gain the necessary registration to fish in British waters, and legally challenged the provisions of the Merchant Shipping Act 1988 on the basis that it was incompatible with EU law, and that it had been discriminated against on the grounds of nationality. After protracted court battles, eventually, our highest court at the time, the House of Lords, ruled that indeed that these provisions of the Merchant Shipping Act should be suspended (and in due course amended) as it was incompatible with the EU provisions.
In the UK, a DUALIST approach is taken which means that certain types of EU law do not generally become part of the UK law, until they have been brought into effect through the passing of a piece of UK legislation, through the British parliament. This type of law is often brought into effect as an EU DIRECTIVE. Some types of EU law do however have direct effect and do not need domestic national enactment. These are commonly referred to as EU REGULATIONS, made by the EU Commission and the Council of Ministers. Finally, another important provision of EU law in the UK, is based in the European Convention on Human Rights. The UK passed an Act of Parliament, the Human Rights Act 1988, which allows UK courts to declare a provision of statutory law incompatible, if it violates the Convention on Human Rights.
2. The Courts and the Doctrine of Precedent
(i)The Courts Today
A basic distinction must be made between the CRIMINAL LAW, and the CIVIL LAW. The criminal law is accusatorial, and is applied through the trial mechanism, between the community, here in the UK this is the Queen, and the person accused of the crime, the accused. The case is brought on behalf of the Queen, as the representative of the community, and so this party is referred to as R, and the other party is referred to by name. So for example a case will be cited as R v Brown, and will be followed by the date in brackets (1993). There is also then a citation as to where and in what law report the case can be found.
The civil law is concerned with disputes between individuals. The claimant commences proceedings against another, the defendant, who defends the claim, and may also counter-claim against the claimant. So, for example, as we will see, a civil claim may be brought for a breach of contract between the parties to that contract. An example would be the case of Mitchell Ltd v George Finney Lock Seeds Ltd (1983). We will discuss the facts.
We will now look in brief at the court systems with reference to the text, Smith and Keenan, at pages 19 and 20.
The Courts today have the Supreme Court at the top of the hierarchy, which under the Constitutional Reform Act 2005, creates a new independent Supreme Court of the United Kingdom. Previously, the highest court in the legal hierarchy was the House of Lords, and it enjoyed the jurisdiction as the final court of appellate jurisdiction
But again we must remember that in relation to a point in European law, the European Court of Justice has supremacy, and any court may, and in the case of the Supreme Court, must, seek a preliminary ruling on a relevant point of European law from the ECJ.
We should also mention the European Court of Human Rights, which sits in Strasbourg. It was set up by the Convention for the Protection of Human Rights and Fundamental Freedoms, to ensure that those of the member states that choose to engage, observe the terms of their engagement. The UK is one of the states which have accepted the courts jurisdiction. The ECHR can now be approached directly by the person alleging a human rights violation, by bringing an action against the state responsible.
So, for example in the case of Lustig-Prean and Beckett v United Kingdom (1999), the court decided that certain members of the UK armed forces who were discharged because of their homosexuality had been subjected to a violation of their human rights under the European Convention. The decision of the court meant that the armed forces had to revise their policy on homosexuality, but the case has no binding effect on private business, because it only relates to the state, in this case the UK.